Managing Your Money : Balance Your Checkbook? Why? : Some call it a waste of time, but the experts say you ignore it at your peril.

Charles Culver, an aerospace consultant, has meticulous files containing every check he has written for 15 years. They’re a monument to his system of balancing his checking account “down to the penny.”

But Mike Miller, a Hollywood guitarist, has a paper bag in his bedroom where he tosses his monthly checking statement without so much as a glance, an admission that he doesn’t have “an accountant’s mentality.”

The American economy generates an estimated 40 billion checks annually. The monthly ritual of balancing a checking account is the financial equivalent of flossing your teeth--onerous, but necessary for financial health.

Or is it? Lots of people fail to reconcile their account because they’re busy, lazy or confused. But others shun the monthly ritual purposefully. They say it’s simply not worth their time.

“I don’t balance my checkbook,” says Sung Won Sohn, chief economist at Norwest Bank in Minneapolis. “People are surprised, because they think if anybody should do it, I should. But my time is much better spent examining investment alternatives.”

The logic goes this way. Say you make $1,000 a week, or $25 an hour excluding benefits. What’s your spare time worth? Given that overtime work means time-and-a-half pay, one of your leisure hours should command $37.50. Most people would price it higher still.

Assuming 30 minutes a month to balance your account, this little ritual is costing you $225 a year. The question is, are you likely to uncover an error that large?

Steve Poretzky did. A few of his checks were stolen several years ago. The thief even managed to get some blank counter checks and within a short time withdrew $20,000 of Poretzky’s money.

“If I didn’t balance my checkbook, I would have never caught up,” he says. The bank reimbursed him because it was in error for cashing the forged checks.

Poretzky, who manages the Los Angeles branch of Banque Indosuez, says he writes too many checks to “eyeball” his account with any accuracy.

“Most of the bankers I know do balance their checkbooks,” he says. “The major risk is that you will bounce a check.”

One way around this is automatic overdraft protection. It may seem a service for the careless, but Sohn says the real appeal is for busy professionals who lack the time to monkey around with a check register.

Busy or not, you shouldn’t just ignore your checking account, the experts say.

“Ideally, people should be reconciling their accounts every month,” says Ken McEldowney, executive director of Consumers Action, an advocacy group.

Everyone should record deposits, checks and automated teller machine activity, he says, adding: “At least they should check when the bank statement comes that the entries are all correct.”

Plenty of people consider it part of their duty to God and country to make sure their checkbooks balance, which can be especially difficult for married couples sharing one account.

Among compulsive personalities, these matters take on enormous proportions. People will stay up to all hours of the night tracking errors of just a few cents.

Others are a little more casual. Mel Green, a Hollywood writer, doesn’t trust the banking system but confesses nonetheless that he never balances his checkbook--or even records the checks he writes.

“Once you get started, it is an endless process,” he says. “You start out writing in the register, and then you get deeper and deeper. I just write them and rip them out.”

Green is not the only one. In many cases, when that fat envelope arrives from the bank, it is a sorry record of cash mismanagement.

“It’s not uncommon for people to walk into a bank and say, ‘How can I be overdrawn when I still have checks in my book?’ ” says Mitchell Kauffman, a certified financial planner in Pasadena.

Despite their armies of accountants and money managers, big corporations and even the government aren’t beyond the same dumb mistakes that plague the masses.

The General Accounting Office found, for example, that the Air Force’s space division in El Segundo had a $2.4-billion discrepancy in its financial accounts. Nobody burned the midnight oil over that one, the GAO asserted. Rather, the service simply made an “unsupported and arbitrary” adjustment to get the books to balance, the GAO said.

How much of an error are hard-core balancers willing to eat before they probe deeper? For many, the threshold seems to be $5 or $10 before the calculator is turned on.

As much as people hope for a bank error, the sad fact is that your statement is usually right. First Interstate Bank is so sure of the accuracy of its statements that it offers rewards to eagle eyes who find errors.

“We’ll give them five bucks,” said Simon Barker-Benfield, a First Interstate spokesman.

In most cases, consumers have to act fast if they do find a bank error. Most banks give consumers only 60 to 90 days to protest their statement before the bank assumes that it is accepted, according to Jane Killpack, a consumer assistance examiner at the California Banking Department.

There are legitimate shortcuts to a monthly reconciliation of a register against the bank statement. Some consumers simply round off all register entries to the nearest dollar, making the entry and the arithmetic simpler.

Others have two accounts. They alternate between them every other month, so all checks and deposits are cleared by the time the statement arrives, says Cheryl Friedling, a First Interstate spokeswoman.

And ATMs can provide an instant balance. Vince Cruz, an office furniture manufacturer’s representative, says he uses an ATM for this every other day.

Kauffman, the financial planner, insists that some attention to the check register is important because “the checkbook is critical in terms of building financial awareness.”

For some people, it has a deeper function. Says Kauffman: “A checkbook can give a sense to somebody who has lost control of their life . . . They feel if they can balance their checkbook, then they have really beat something.”

Tips

How to Balance Your Checkbook

The idea is to make sure your register of checks and deposits reconciles w ith the ending balance on your monthly statement. Obviously, that means recording checks and deposits as they occur and checking off those that appear on your statement.

* When your statement comes, identify the checks that haven’t cleared and add them to the register balance. Then deduct any deposits that haven’t cleared.

* The result should match the ending balance on your statement.